- Reaction score
- 5,510
- Points
- 1,160
I have pruned this decision down to the relevant parts. Without commenting on whether there was actual negligence involved, the manufacturer was able to defeat the claim based on the provisions of the contract.
Gulf Helicopters Ltd. v. Bell Helicopter Textron Canada Ltd., [April, 2005]
COURT FILE NO.: 03-CV-024151
REASONS FOR JUDGMENT
The Proceeding:
[1] This is a motion by the defendant under Rule 20.01(3) for summary judgment dismissing the plaintiff's statement of claim dated June 16, 2003, following a notice of action issued on May 21, 2003. The defendant's statement of defence is dated November 7, 2003. The notice of this motion is dated January 20, 2004.
[2]
Background:
[3] The plaintiff has its principal place of business in Doha, in the State of Qatar in the Persian Gulf. It was originally formed as an international joint venture and is currently owned by Qatar Petroleum Corporation. The defendant is a successor to the corporation originally named in the plaintiff's statement of claim. The defendant is affiliated with Bell Helicopter Textron Inc., a U.S. corporation. The Agreement was assigned by the defendant's predecessor to the defendant's U.S. affiliate on November 7, 1990, without recourse. In their submissions, no significance was attached to this assignment by either party.
[4] The plaintiff and the defendant's predecessor entered into the Agreement under which the plaintiff agreed to purchase two helicopters for a total price of US$ 7,017,400., subsequently increased to US$ 7,227,600. One of these helicopters was the Bell 412SP helicopter, subsequently bearing Registration No. A7-HAQ (the "Helicopter"), which was delivered to the plaintiff on December 19, 1990, for a purchase price of US$ 3,613,800.
[5] On May 21, 1997, the Helicopter was forced to make an emergency ditching in the shallow waters of the Gulf north-east of Doha, because of extreme vibration in the main rotor system. As a result of the emergency ditching, the Helicopter suffered damage, which was repaired at a cost of US$ 849,807. In this action, the plaintiff seeks to recover the Canadian dollar equivalent of its repair costs as damages.
[6] In its statement of claim, the plaintiff alleges that the cause of the ditching was the failure of the Helicopter's main rotor yoke ("m/r yoke") supplied by the defendant. The defendant denies supplying the m/r yoke to the plaintiff, but acknowledges that the forced ditching of the Helicopter was the result of "a fatigue fracture though the leading flexure web area of the main rotor yoke". At the time of the forced ditching, the m/r yoke assembly had recorded a total of 4,682.55 hours of operation since new. The m/r yoke assembly was due to be retired from service at 5,000 hours of operation. (Affidavit of Craig Mair, sworn January 16, 2004, para. 7, Motion Record Tab 2).
[7] The thickness of the m/r yoke at the thinnest portion of the flexure area was insufficient to resist fatigue failure through the 5,000-hour life of the m/r yoke, causing premature failure. After the ditching incident, the defendant conducted its own examination of the m/r yoke assembly involved and its stated conclusions (see paragraph [6] above), about the cause of failure of the m/r yoke are based on those tests. The defendant acknowledges that during the tests the components (including the m/r yoke) were cut up. In recompense, the defendant gave the plaintiff " a new unused main rotor yoke assembly to replace the damaged component". (Mair's Affidavit, op.cit., paras. 8,19).
[8] As the plaintiff points out, no opportunity was given to its representatives to conduct their own examination of the failed m/r yoke or to arrange for an independent examination. Nor were they permitted to attend the defendant's examination or to share fully in the test results (Affidavit of Nigel Hammond, affirmed, June 30, 2004, paras. 22, 37, 39, 40, Responding Motion Record, Tab 1); Affidavit of Alwyn Roberts, sworn May 18, 2004, paras. 32-42; Responding Motion Record, Tab 2).
[9] The failed m/r yoke assembly (the "Yoke") which was installed on the Helicopter at the time of the forced ditching was originally sold by the defendant's U.S. affiliate, Bell Helicopter Textron Inc., to BH Pacific (now Helitech Australia), an Australian corporation, and then re-sold to Esso Australia Ltd. on May 1, 1992 and installed on another Bell 412SP helicopter bearing Registration No. A7-HAU (the "Esso Helicopter"). The Esso Helicopter was subsequently sold to the plaintiff with the Yoke in place. On November 26, 1995, the plaintiff removed the Yoke from the Esso Helicopter and fitted the Yoke to the Helicopter, which is the subject of this action. It is common ground that it is the usual and accepted practice in the industry to transfer a component from one helicopter to another, together with a record of its operating hours.
Argument
[16] In its statement of claim, the plaintiff alleges both breach of contract and negligence by the defendant. As to breach of contract, the plaintiff says that the defendant breached paragraph 19 of the Agreement (Support Agreement) by,
(a) making available an inadequate spare part to the plaintiff;
(b) designing or causing to be designed an inadequate spare part; and
(c) utilizing an inadequately designed spare part.
The "inadequate spare part" is, in all cases, the Yoke.
[17] As to negligence, the plaintiff alleges that the forced ditching of the Helicopter was caused solely by the negligence of the defendant, including but not limited to,
(a) designing, causing to be designed and/or utilizing an m/r yoke (including, the Yoke), with insufficient manufacturing tolerances for the thickness of the flexure area; thereby creating a risk of premature failure in some m/r yokes;
(b) marketing and/or putting into the stream of commerce inadequate m/r yokes (including, the Yoke); and
(c) failing to warn the plaintiff of the risk of premature failure in some m/r yokes (including, the Yoke).
[18] On the other hand, in its statement of defence, the defendant expressly relies on paragraphs 8 (Warranty and Remedy) and 15 (Responsibility for Certain Losses, Damages, Injuries or Deaths) of the Agreement, asserting in paragraph 21 that "by reason of the provisions, terms and conditions of the (Agreement) referred to in its statement of defence, the plaintiff is not entitled to assert the claims in the within action and that the said claims are barred as a result".
[19] Paragraph 15 of the Agreement does not apply to the circumstances of this case. It expressly provides that "neither party shall hold the other responsible for loss of or damage to its property, or injury to or death of its personnel at the facilities of either party, in the course of performing the agreement,except as a result of wilful misconduct". (emphasis added). First, no allegation is made in this action that loss or damage occurred at the facilities of either party. Second, no allegation is made that loss or damage resulted from the wilful misconduct of either party.
[20] The basis of the defence to the plaintiff's claims in this action is found in paragraph 8 of the Agreement. First, the Seller expressly warrants "each new helicopter to be free from defect and material and workmanship under normal use and service". The Seller's obligation is limited to replacement or repair of defective parts, as "determined to the Seller's reasonable satisfaction" to have been defective within 2000 hours of operation or two years after delivery, "whichever first occurs". There are other limitations on this express warranty which are not material to the dispute in this case. In any event, the plaintiff cannot rely on this express warranty in respect of the Yoke because at the time of the forced ditching of the Helicopter on May 21, 1997, the Yoke had been delivered to the original purchase more than two years before; and had recorded a total of 4,682.55 hours of operation since new (see paras. [6] and [9] above).
The next following sub-paragraph reads:
THIS WARRANTY IS GIVEN AND ACCEPTED IN PLACE OF (i) ALL OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE AND (ii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT OR IN TORT, INCLUDING PRODUCT LIABILITIES BASED UPON STRICT LIABILITY OR NEGLIGENCE, ACTUAL OR IMPUTED.
The next following sub-paragraph begins with the statement that "This warranty is the only warranty made by Seller" and then repeats that the remedies of the Purchaser and the obligations of the Seller "are limited to the repair or replacement of helicopter parts as provided herein". The paragraph continues,
Seller excludes liability, whether as a result of breach of contract or warranty, negligence or strict product liability, for incidental or consequential damages including without limitation, damage to the helicopter or other property, costs, and expenses resulting from required changes or modifications to helicopter components and assemblies, changes in retirement lives and overhaul periods, and costs or expenses for commercial losses or lost profits due to loss of use or grounding of helicopters or otherwise.
Paragraph 8 of the Agreement concludes with two final sub-paragraphs in which the Seller disclaims or limits any warranty or other liability to the Purchaser for engines and accessories (including batteries), radios, avionics and equipment furnished by the Purchaser or manufactured by others and installed at the Purchaser's request, "except Seller assigns the manufacturer's warranty to Purchaser". The express warranty does not apply to "any helicopter or part thereof" which has been repaired or altered outside Seller's factory in any way that, in Seller's judgment, affects its stability, safety or reliability; or which has been subject to misuse, negligence or accident. The final sub-paragraph concludes with the statement that "No person, corporation or organization is authorized by Seller to assume for it any other liability in connection with the sale of its helicopters and parts". The two final sub-paragraphs of paragraph 8 of the Agreement are not material to the dispute in this action.
Decision
[21] The defendant submits in its statement of defence (see para. [18] above) and on this motion that the provisions of paragraph 8, including the express warranty in the first paragraph and the provisions excluding all other liability in the two following paragraphs (see para. [20] above) are a complete answer to the plaintiff's asserted claims and sufficient grounds for summary judgment dismissing the plaintiff's statement of claim.
[29] In the case of the Agreement between the plaintiff and the defendant, the language of the exclusionary clause is specific, unambiguous and comprehensive. Liability for breach of contract is expressly limited to the warranty set out in the first sub-paragraph of paragraph 8 of the Agreement. Liability for negligence is expressly excluded. The Agreement is a commercial contract. The parties were of equal bargaining power when they signed the Agreement. In my view, the contract "trumps" the tort, in this case.
Order:
[30] Accordingly, a summary judgment will issue dismissing the plaintiff's statement of claim, dated June 16, 2003, with costs.
Costs:
Gulf Helicopters Ltd. v. Bell Helicopter Textron Canada Ltd., [April, 2005]
COURT FILE NO.: 03-CV-024151
REASONS FOR JUDGMENT
The Proceeding:
[1] This is a motion by the defendant under Rule 20.01(3) for summary judgment dismissing the plaintiff's statement of claim dated June 16, 2003, following a notice of action issued on May 21, 2003. The defendant's statement of defence is dated November 7, 2003. The notice of this motion is dated January 20, 2004.
[2]
Background:
[3] The plaintiff has its principal place of business in Doha, in the State of Qatar in the Persian Gulf. It was originally formed as an international joint venture and is currently owned by Qatar Petroleum Corporation. The defendant is a successor to the corporation originally named in the plaintiff's statement of claim. The defendant is affiliated with Bell Helicopter Textron Inc., a U.S. corporation. The Agreement was assigned by the defendant's predecessor to the defendant's U.S. affiliate on November 7, 1990, without recourse. In their submissions, no significance was attached to this assignment by either party.
[4] The plaintiff and the defendant's predecessor entered into the Agreement under which the plaintiff agreed to purchase two helicopters for a total price of US$ 7,017,400., subsequently increased to US$ 7,227,600. One of these helicopters was the Bell 412SP helicopter, subsequently bearing Registration No. A7-HAQ (the "Helicopter"), which was delivered to the plaintiff on December 19, 1990, for a purchase price of US$ 3,613,800.
[5] On May 21, 1997, the Helicopter was forced to make an emergency ditching in the shallow waters of the Gulf north-east of Doha, because of extreme vibration in the main rotor system. As a result of the emergency ditching, the Helicopter suffered damage, which was repaired at a cost of US$ 849,807. In this action, the plaintiff seeks to recover the Canadian dollar equivalent of its repair costs as damages.
[6] In its statement of claim, the plaintiff alleges that the cause of the ditching was the failure of the Helicopter's main rotor yoke ("m/r yoke") supplied by the defendant. The defendant denies supplying the m/r yoke to the plaintiff, but acknowledges that the forced ditching of the Helicopter was the result of "a fatigue fracture though the leading flexure web area of the main rotor yoke". At the time of the forced ditching, the m/r yoke assembly had recorded a total of 4,682.55 hours of operation since new. The m/r yoke assembly was due to be retired from service at 5,000 hours of operation. (Affidavit of Craig Mair, sworn January 16, 2004, para. 7, Motion Record Tab 2).
[7] The thickness of the m/r yoke at the thinnest portion of the flexure area was insufficient to resist fatigue failure through the 5,000-hour life of the m/r yoke, causing premature failure. After the ditching incident, the defendant conducted its own examination of the m/r yoke assembly involved and its stated conclusions (see paragraph [6] above), about the cause of failure of the m/r yoke are based on those tests. The defendant acknowledges that during the tests the components (including the m/r yoke) were cut up. In recompense, the defendant gave the plaintiff " a new unused main rotor yoke assembly to replace the damaged component". (Mair's Affidavit, op.cit., paras. 8,19).
[8] As the plaintiff points out, no opportunity was given to its representatives to conduct their own examination of the failed m/r yoke or to arrange for an independent examination. Nor were they permitted to attend the defendant's examination or to share fully in the test results (Affidavit of Nigel Hammond, affirmed, June 30, 2004, paras. 22, 37, 39, 40, Responding Motion Record, Tab 1); Affidavit of Alwyn Roberts, sworn May 18, 2004, paras. 32-42; Responding Motion Record, Tab 2).
[9] The failed m/r yoke assembly (the "Yoke") which was installed on the Helicopter at the time of the forced ditching was originally sold by the defendant's U.S. affiliate, Bell Helicopter Textron Inc., to BH Pacific (now Helitech Australia), an Australian corporation, and then re-sold to Esso Australia Ltd. on May 1, 1992 and installed on another Bell 412SP helicopter bearing Registration No. A7-HAU (the "Esso Helicopter"). The Esso Helicopter was subsequently sold to the plaintiff with the Yoke in place. On November 26, 1995, the plaintiff removed the Yoke from the Esso Helicopter and fitted the Yoke to the Helicopter, which is the subject of this action. It is common ground that it is the usual and accepted practice in the industry to transfer a component from one helicopter to another, together with a record of its operating hours.
Argument
[16] In its statement of claim, the plaintiff alleges both breach of contract and negligence by the defendant. As to breach of contract, the plaintiff says that the defendant breached paragraph 19 of the Agreement (Support Agreement) by,
(a) making available an inadequate spare part to the plaintiff;
(b) designing or causing to be designed an inadequate spare part; and
(c) utilizing an inadequately designed spare part.
The "inadequate spare part" is, in all cases, the Yoke.
[17] As to negligence, the plaintiff alleges that the forced ditching of the Helicopter was caused solely by the negligence of the defendant, including but not limited to,
(a) designing, causing to be designed and/or utilizing an m/r yoke (including, the Yoke), with insufficient manufacturing tolerances for the thickness of the flexure area; thereby creating a risk of premature failure in some m/r yokes;
(b) marketing and/or putting into the stream of commerce inadequate m/r yokes (including, the Yoke); and
(c) failing to warn the plaintiff of the risk of premature failure in some m/r yokes (including, the Yoke).
[18] On the other hand, in its statement of defence, the defendant expressly relies on paragraphs 8 (Warranty and Remedy) and 15 (Responsibility for Certain Losses, Damages, Injuries or Deaths) of the Agreement, asserting in paragraph 21 that "by reason of the provisions, terms and conditions of the (Agreement) referred to in its statement of defence, the plaintiff is not entitled to assert the claims in the within action and that the said claims are barred as a result".
[19] Paragraph 15 of the Agreement does not apply to the circumstances of this case. It expressly provides that "neither party shall hold the other responsible for loss of or damage to its property, or injury to or death of its personnel at the facilities of either party, in the course of performing the agreement,except as a result of wilful misconduct". (emphasis added). First, no allegation is made in this action that loss or damage occurred at the facilities of either party. Second, no allegation is made that loss or damage resulted from the wilful misconduct of either party.
[20] The basis of the defence to the plaintiff's claims in this action is found in paragraph 8 of the Agreement. First, the Seller expressly warrants "each new helicopter to be free from defect and material and workmanship under normal use and service". The Seller's obligation is limited to replacement or repair of defective parts, as "determined to the Seller's reasonable satisfaction" to have been defective within 2000 hours of operation or two years after delivery, "whichever first occurs". There are other limitations on this express warranty which are not material to the dispute in this case. In any event, the plaintiff cannot rely on this express warranty in respect of the Yoke because at the time of the forced ditching of the Helicopter on May 21, 1997, the Yoke had been delivered to the original purchase more than two years before; and had recorded a total of 4,682.55 hours of operation since new (see paras. [6] and [9] above).
The next following sub-paragraph reads:
THIS WARRANTY IS GIVEN AND ACCEPTED IN PLACE OF (i) ALL OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE AND (ii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT OR IN TORT, INCLUDING PRODUCT LIABILITIES BASED UPON STRICT LIABILITY OR NEGLIGENCE, ACTUAL OR IMPUTED.
The next following sub-paragraph begins with the statement that "This warranty is the only warranty made by Seller" and then repeats that the remedies of the Purchaser and the obligations of the Seller "are limited to the repair or replacement of helicopter parts as provided herein". The paragraph continues,
Seller excludes liability, whether as a result of breach of contract or warranty, negligence or strict product liability, for incidental or consequential damages including without limitation, damage to the helicopter or other property, costs, and expenses resulting from required changes or modifications to helicopter components and assemblies, changes in retirement lives and overhaul periods, and costs or expenses for commercial losses or lost profits due to loss of use or grounding of helicopters or otherwise.
Paragraph 8 of the Agreement concludes with two final sub-paragraphs in which the Seller disclaims or limits any warranty or other liability to the Purchaser for engines and accessories (including batteries), radios, avionics and equipment furnished by the Purchaser or manufactured by others and installed at the Purchaser's request, "except Seller assigns the manufacturer's warranty to Purchaser". The express warranty does not apply to "any helicopter or part thereof" which has been repaired or altered outside Seller's factory in any way that, in Seller's judgment, affects its stability, safety or reliability; or which has been subject to misuse, negligence or accident. The final sub-paragraph concludes with the statement that "No person, corporation or organization is authorized by Seller to assume for it any other liability in connection with the sale of its helicopters and parts". The two final sub-paragraphs of paragraph 8 of the Agreement are not material to the dispute in this action.
Decision
[21] The defendant submits in its statement of defence (see para. [18] above) and on this motion that the provisions of paragraph 8, including the express warranty in the first paragraph and the provisions excluding all other liability in the two following paragraphs (see para. [20] above) are a complete answer to the plaintiff's asserted claims and sufficient grounds for summary judgment dismissing the plaintiff's statement of claim.
[29] In the case of the Agreement between the plaintiff and the defendant, the language of the exclusionary clause is specific, unambiguous and comprehensive. Liability for breach of contract is expressly limited to the warranty set out in the first sub-paragraph of paragraph 8 of the Agreement. Liability for negligence is expressly excluded. The Agreement is a commercial contract. The parties were of equal bargaining power when they signed the Agreement. In my view, the contract "trumps" the tort, in this case.
Order:
[30] Accordingly, a summary judgment will issue dismissing the plaintiff's statement of claim, dated June 16, 2003, with costs.
Costs:
